America Saves Week " Five Strategies For Saving |

America Saves Week " Five Strategies For Saving

Will Arduino
VP Grand Mountain Bank
Granby, Colorado

The personal savings rate is near zero, most Americans are not saving adequately for retirement, and most lower-income households do not have adequate emergency savings for unexpected expenditures like a car repair. But with more positive encouragement and support, more Americans can be persuaded to build wealth, not debt.

This week is the first in a series of articles leading up to America Saves Week, Feb. 22 through March 1. In coming weeks I’ll offer a quiz to test your savings knowledge, 12 steps to assess your savings progress, how to teach young people to save, how to save in tough economic times and finally, how to build wealth, not debt.

America Saves is a nationwide campaign in which a broad coalition of nonprofit, corporate, and government groups helps individuals and families save and build wealth. Through information, advice, and encouragement, they assist those who wish to pay down debt, build an emergency fund, save for a home, save for an education, or save for retirement.

America Saves Week encourages and assists individuals to assess their savings progress and take action to advance this progress. This encouragement and assistance will be provided by organizations and professionals with an interest in improving the financial security of individuals and families as well as through this weekly column.

Five Saving Strategies:

Pay off high-cost debt.

The best investment most borrowers can make is to pay off consumer debt with double-digit interest rates. For example, if you have a $3,000 credit card balance at 19.8 percent, and you pay the required minimum balance of 2 percent of the balance or $15, whichever is greater, it will take 39 years to pay off the loan. And you will pay more than $10,000 in interest charges.

Buy a home and pay off the mortgage before you retire.

The largest asset of most middle-income families is their home equity. Once these families have made their last mortgage payment, they have far lower housing expenses. They also have an asset that can be borrowed on in emergencies or converted into cash through sale of the home.

Participate in a work-related retirement program

Many employees turn down free money from their employer by not signing up for a work-related retirement program such as a 401(k) plan. If they did participate, with a dollar-for-dollar match they would likely receive an annual yield of greater than 100 percent on their investment.

Outside of work, save monthly through an automated transfer from checking to savings.

These savings will provide funds for emergencies, home purchase, school tuition, or even retirement. Almost all banking institutions will, on request, automatically transfer funds monthly from your checking account to a savings account, U.S. Savings Bond, or stock mutual fund. What you don’t see, you will probably not miss.

Maximize your earnings with CDs or U.S. Savings Bonds

Many CDs from a bank or credit union, and Series I Savings Bonds, currently pay between 3 percent and 4 percent. With a 4 percent yield your money will double in 18 years.

For more information on these and other great savings ideas, please visit the America Saves Web site at:

” Content for this story provided by and used with the permission of America Saves.

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